What changed in this filing

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Item 1. Financial Statements

2024-08-01 compared with 2024-05-01 · 152 added, 74 removed, 328 unchanged (41% of the section changed)

3 unchanged sentences

(in millions, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Property and equipment, net $ 7,422 $ 7,459

21 unchanged sentences

Stockholders' Equity

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 211,377,190 shares issued and 210,525,968 shares outstanding as of March 31, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Common stock, par value $ 0.01 per share, 6,000,000,000 shares authorized, 209,770,362 shares issued and 208,917,170 shares outstanding as of June 30, 2024 and 210,676,264 shares issued and 209,987,581 shares outstanding as of December 31, 2023

Additional paid-in capital 4,133 4,156

9 unchanged sentences

Three Months Ended

June 30, Six Months Ended

2024 2023 2024 2023

Rooms $ 416 $ 442 $ 790 $ 824

1 unchanged sentence

Ancillary hotel 66 72 128 137

Other 22 22 43 42

Total revenues 686 714 1,325 1,362

8 unchanged sentences

Corporate general and administrative 18 16 35 32

Other 20 22 41 42

Total expenses 580 812 1,141 1,395

1 unchanged sentence

Gain on derecognition of assets 15 — 29 —

Operating income 92 80

Operating income (loss) 121 ( 98 ) 213 ( 18 )

Interest income 5 10 10 20

2 unchanged sentences

Equity in earnings from investments in affiliates 1 3 1 7

Other gain, net — 1

Income before income taxes 30 35

Income tax expense ( 1 ) ( 2 )

Net income 29 33

Other (loss) gain, net ( 3 ) 3 ( 3 ) 4

Income (loss) before income taxes 55 ( 143 ) 85 ( 108 )

Income tax benefit (expense) 12 ( 3 ) 11 ( 5 )

Net income (loss) 67 ( 146 ) 96 ( 113 )

Net income attributable to noncontrolling interests ( 3 ) ( 4 ) ( 4 ) ( 4 )

Net income attributable to stockholders $ 28 $ 33

Earnings per share:

Earnings per share – Basic $ 0.13 $ 0.15

Earnings per share – Diluted $ 0.13 $ 0.15

Net income (loss) attributable to stockholders $ 64 $ ( 150 ) $ 92 $ ( 117 )

Earnings (loss) per share:

Earnings (loss) per share – Basic $ 0.31 $ ( 0.70 ) $ 0.44 $ ( 0.54 )

Earnings (loss) per share – Diluted $ 0.30 $ ( 0.70 ) $ 0.44 $ ( 0.54 )

Weighted average shares outstanding – Basic 209 215 209 217

4 unchanged sentences

(unaudited, in millions)

Three Months Ended

Six Months Ended

Operating Activities:

Net income $ 29 $ 33

Adjustments to reconcile net income to net cash provided by operating activities:

Net income (loss) $ 96 $ ( 113 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Depreciation and amortization 129 128

3 unchanged sentences

Equity in earnings from investments in affiliates ( 1 ) ( 7 )

Other loss, net 3 —

Share-based compensation expense 9 9

1 unchanged sentence

Distributions from unconsolidated affiliates — 7

Deferred income taxes ( 13 ) —

Changes in operating assets and liabilities ( 1 ) 33

4 unchanged sentences

Proceeds from asset dispositions, net — 116

Proceeds from the sale of investments in affiliates, net — 3

Contributions to unconsolidated affiliates — ( 4 )

Net cash (used in) provided by investing activities ( 70 ) 49

Net cash used in investing activities ( 121 ) ( 20 )

Financing Activities:

Proceeds from issuance of Senior Notes 550 —

Repurchase or redemption of Senior Notes ( 650 ) —

Borrowings from credit facilities 200 —

Repayments of credit facilities — ( 50 )

27 unchanged sentences

Balance as of March 31, 2024 211 2 4,154 ( 367 ) ( 47 ) 3,742

Share-based compensation, net — — 4 — — 4

Net income — — — 64 3 67

Dividends and dividend equivalents (1)

— — — ( 52 ) — ( 52 )

Repurchase of common stock ( 2 ) — ( 25 ) — — ( 25 )

Balance as of June 30, 2024 209 $ 2 $ 4,133 $ ( 355 ) $ ( 44 ) $ 3,736

Common Stock Additional

Capital Retained

Earnings Non-

Earnings (Accumulated Deficit) Non-

Interests Total

8 unchanged sentences

Balance as of March 31, 2023 216 2 4,216 19 ( 49 ) 4,188

Share-based compensation, net — — 5 — — 5

Net (loss) income — — — ( 150 ) 4 ( 146 )

Dividends and dividend equivalents (1)

— — — ( 34 ) — ( 34 )

(1) Dividends declared per common share were $ 0.25 and $ 0.15 for the three months ended March 31, 2024 and 2023, respectively.

Balance as of June 30, 2023 216 $ 2 $ 4,221 $ ( 165 ) $ ( 45 ) $ 4,013

___________________________________

(1) Dividends declared per common share were $ 0.25 for each of the three months ended March 31, 2024 and June 30, 2024.

Dividends declared per common share were $ 0.15 for each of the three months ended March 31, 2023 and June 30, 2023.

Refer to the notes to the unaudited condensed consolidated financial statements.

32 unchanged sentences

Reclassifications

Certain line items on the condensed consolidated statements of operations for the three months ended March 31, 2023 have been reclassified to conform to the current period presentation.

Certain line items on the condensed consolidated statements of operations for the three and six months ended June 30, 2023 have been reclassified to conform to the current period presentation.

Summary of Significant Accounting Policies

2 unchanged sentences

Acquisitions and Dispositions

In March 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $ 18 million, including transaction costs.

During the six months ended June 30, 2023, we acquired two parcels of land, adjacent to the Hilton Hawaiian Village Waikiki Beach Resort, for a purchase price of approximately $ 18 million, including transaction costs.

We accounted for the purchase as an acquisition of an asset, and the entire purchase price was allocated to land.

In February 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $ 118.25 million.

In June 2024, we made the decision to permanently close the Hilton Oakland Airport, which we anticipate will occur during the third quarter of 2024.

In connection with that decision, we notified the ground lessor of the hotel of our termination of the ground lease on or about the date on which the hotel closes.

During the six months ended June 30, 2023, we sold the Hilton Miami Airport hotel for gross proceeds of $ 118.25 million.

We recognized a net gain of approximately $ 15 million, which is included in gain on sale of assets, net in our condensed consolidated statements of operations.

Additionally, in June 2023, the ground lessor terminated the ground lease for the Embassy Suites Phoenix Airport hotel and, pursuant to an agreement, we received an early termination fee of approximately $ 4 million, which is included in other (loss) gain, net in our condensed consolidated statements of operations.

Property and Equipment

Property and equipment were:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

6 unchanged sentences

$ 7,422 $ 7,459

Depreciation of property and equipment was $ 65 million and $ 64 million during the three months ended March 31, 2024 and 2023, respectively.

During the three months ended March 31, 2024, we recognized an impairment loss of approximately $ 5 million related to one of our hotels subject to a ground lease and our inability to recover the carrying value of the asset over the remaining lease term.

Depreciation of property and equipment was $ 63 million and $ 64 million during the three months ended June 30, 2024 and 2023, respectively, and $ 128 million for both the six months ended June 30, 2024 and 2023.

During the three and six months ended June 30, 2024, we recognized impairment losses of approximately $ 7 million and $ 12 million, respectively, related to two of our hotels subject to ground leases and our inability to recover the carrying value of the assets over the remaining lease term.

Refer to Note 7:

"Fair Value Measurements" for additional information.

For the three months ended June 30, 2023, we recognized an approximately $ 202 million impairment loss related to one of the hotels securing our $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") as a result of a decision to cease making debt service payments.

In October 2023, the two San Francisco Hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels") that secure the SF Mortgage Loan were placed into receivership.

Refer to Note 6:

"Debt" and Note 7:

"Fair Value Measurements" for additional information.

Consolidated Variable Interest Entities ("VIEs") and Investments in Affiliates

3 unchanged sentences

Additionally, we have the obligation to absorb their losses and the right to receive benefits that could be significant to them.

The assets of our VIEs

are only available to settle the obligations of these entities.

The assets of our VIEs are only available to settle the obligations of these entities.

Our condensed consolidated balance sheets include the following assets and liabilities of these entities:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

9 unchanged sentences

Four of our hotels are owned by unconsolidated joint ventures in which we hold an interest.

These hotels are accounted for using the equity method and had total debt of approximately $ 702 million as of both March 31, 2024 and December 31, 2023.

These hotels are accounted for using the equity method and had total debt of approximately $ 752 million and $ 702 million as of June 30, 2024 and December 31, 2023, respectively.

Substantially all the debt is secured solely by the affiliates’ assets or is guaranteed by other partners without recourse to us.

Debt balances and associated interest rates as of March 31, 2024 were:

In July 2024, the joint ventures that own and operate the Hilton La Jolla Torrey Pines sold the hotel for gross proceeds of approximately $ 165 million, and our pro-rata share of the gross proceeds was approximately $ 41 million, which was reduced by our portion of debt of approximately $ 17 million.

Debt balances and associated interest rates as of June 30, 2024 were:

Principal balance as of

Interest Rate

at March 31, 2024 Maturity Date March 31, 2024 December 31, 2023

at June 30, 2024 Maturity Date June 30, 2024 December 31, 2023

(in millions)

6 unchanged sentences

December 2026 — —

2024 Term Loan

SOFR + 1.75 % (4)

May 2027 200 —

2025 Senior Notes (5)

4 unchanged sentences

4.88 % May 2029 750 750

2030 Senior Notes (5)

7.00 % February 2030 550 —

Finance lease obligations

7 unchanged sentences

The mortgage loan for Hilton Denver City Center matures in 2042 but became callable by the lender in August 2022 with six months of notice.

As of March 31, 2024, Park had not received notice from the lender.

As of June 30, 2024, Park had not received notice from the lender.

(3) Our revolving credit facility ("Revolver") permits one or more standby letters of credit, up to a maximum aggregate outstanding balance of $ 50 million, to be issued on behalf of us.

As of March 31, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

(4) SOFR includes a credit spread adjustment of 0.1 %.

(5) In May and September 2020, our Operating Company, PK Domestic and PK Finance Co-Issuer Inc.

("PK Finance") issued an aggregate of $ 650 million of senior notes due 2025 (“2025 Senior Notes”) and an aggregate of $ 725 million of senior notes due 2028 (“2028 Senior Notes”), respectively.

Additionally, in May 2021, our Operating Company, PK Domestic and PK Finance issued an aggregate of $ 750 million of senior notes due 2029 (“2029 Senior Notes”).

As of June 30, 2024, we had approximately $ 4 million outstanding on a standby letter of credit and $ 946 million of available capacity under our Revolver.

(4) The secured overnight financing rate ("SOFR") includes a credit spread adjustment of 0.1 %.

(5) In May 2020, our Operating Company, PK Domestic and PK Finance Co-Issuer Inc.

("PK Finance") issued an aggregate of $ 650 million senior notes due 2025 ("2025 Senior Notes"), all of which were repurchased or redeemed during the second quarter of 2024.

Our Operating Company, PK Domestic, and PK Finance also issued an aggregate of $ 725 million of senior notes due 2028 (“2028 Senior Notes”) in September 2020, an aggregate of $ 750 million of senior notes due 2029 (“2029 Senior Notes”) in May 2021 and an aggregate of $ 550 million of senior notes due 2030 ("2030 Senior Notes") in May 2024.

Credit Facilities

2024 Term Loan

In May 2024, the Company, our Operating Company and PK Domestic amended our existing credit agreement to include a new $ 200 million senior unsecured term loan facility ("2024 Term Loan") with a scheduled maturity date of May 14, 2027.

Borrowings under the 2024 Term Loan bear interest based upon SOFR plus a credit spread adjustment of 0.1 %, plus an applicable margin based on our leverage ratio.

We capitalized $ 2 million of financing fees incurred during the three months ended June 30, 2024.

The amendment did not amend or modify existing financial maintenance covenants or other terms and provisions under our existing credit agreement, except to provide that income, value and debt of the Hilton San Francisco Hotels be excluded from the calculations of our leverage ratio, the fixed charge coverage ratio and the secured leverage ratio under the existing credit agreement.

2030 Senior Notes

In May 2024, our Operating Company, PK Domestic and PK Finance issued an aggregate of $ 550 million of 2030 Senior Notes.

Net proceeds from the 2030 Senior Notes and the 2024 Term Loan were used to repurchase or redeem all of the 2025 Senior Notes, and the remainder was used for general corporate purposes.

The 2030 Senior Notes bear interest at a rate of 7.000 % per annum, payable semi-annually in arrears on February 1 and August 1 of each year, beginning February 1, 2025.

The 2030 Senior Notes will mature on February 1, 2030.

We capitalized approximately $ 9 million of issuance costs during the three months ended June 30, 2024.

We may redeem the 2030 Senior Notes at any time prior to August 1, 2026, in whole or in part, at a redemption price equal to 100 % of the principal amount thereof plus accrued and unpaid interest, if any, to, but excluding, the redemption date plus a make-whole premium.

On or after August 1, 2026, we may redeem the 2030 Senior Notes at (i) 103.500 % of the principal amount on or prior to August 1, 2027, (ii) 101.750 % of the principal amount prior to August 1, 2028 and (iii) 100.000 % of the principal amount on or after August 1, 2028, in each case plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

In addition, at any time prior to August 1, 2026, we may redeem up to 40 % of the 2030 Senior Notes with net cash proceeds from certain equity offerings at a redemption price of 107.000 % of the principal amount redeemed plus accrued and unpaid interest, if any, to, but excluding, the redemption date.

The 2030 Senior Notes are guaranteed by Park Parent, PK Domestic REIT Inc., and by the subsidiaries of our Operating Company that also guarantee indebtedness under our credit facility, the 2028 Senior Notes and 2029 Senior Notes.

The guarantees are full and unconditional and joint and several.

The indenture governing the 2030 Senior Notes contains customary covenants that limit the issuers' ability and, in certain instances, the ability of the issuers' subsidiaries, to borrow money, create liens on assets, make distributions and pay dividends on or redeem or repurchase stock, make certain types of investments, sell stock in certain subsidiaries, enter into agreements that restrict dividends or other payments from subsidiaries, enter into transactions with affiliates, issue guarantees of indebtedness, and sell assets or merge with other companies.

These limitations are subject to a number of exceptions and qualifications, including exceptions and qualifications related to the declaration and payment of dividends and the making of distributions in order to maintain our status as a REIT.

In addition, the indenture requires our Operating Company to maintain total unencumbered assets as of each fiscal quarter of at least 150 % of total unsecured indebtedness, in each case calculated on a consolidated basis.

Debt Maturities

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of March 31, 2024 were:

The contractual maturities of our debt, assuming the exercise of all extensions that are exercisable solely at our option, as of June 30, 2024 were:

Year (in millions)

1 unchanged sentence

_____________________________________

(1) Excludes the $ 725 million non-recourse CMBS loan ("SF Mortgage Loan") secured by two of our San Francisco hotels – the 1,921-room Hilton San Francisco Union Square and the 1,024-room Parc 55 San Francisco – a Hilton Hotel (collectively, the "Hilton San Francisco Hotels").

(2) Assumes the exercise of all extensions that are exercisable solely at our option.

(1) Excludes the SF Mortgage Loan secured by the Hilton San Francisco Hotels.

Debt Associated with Hotels in Receivership

3 unchanged sentences

Additionally, beginning June 1, 2023, the loan accrues a monthly late payment administrative fee of 3 % of the monthly amount due.

In October 2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan.

2023, the trustee for the SF Mortgage Loan filed a lawsuit against the borrowers under the SF Mortgage Loan.

In connection with the lawsuit, the court appointed a receiver to take control of the Hilton San Francisco Hotels, which serve as security for the SF Mortgage Loan, and their operations, and thus, we have no further economic interest in the operations of the hotels.

The receiver will operate and has authority over the hotels and, until no later than November 1, 2024, has the ability to sell the hotels.

The court order contemplates that the receivership will end with a non-judicial foreclosure by December 2, 2024, if the hotels are not sold within the predetermined sale period.

The receiver will operate and has authority over the hotels and, until no later than March 31, 2025, has the ability to sell the hotels.

The court order contemplates that the receivership will end with a non-judicial foreclosure by July 15, 2025, if the hotels are not sold within the predetermined sale period.

We derecognized the Hilton San Francisco Hotels from our consolidated balance sheet in October 2023 when the receiver took control of the hotels.

For the three months ended March 31, 2024, we recognized a gain of $ 14 million, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

For the three and six months ended June 30, 2024, we recognized a gain of $ 15 million and $ 29 million, respectively, which is included in gain on derecognition of assets in our condensed consolidated statements of operations.

The gain represents the accrued interest expense associated with the default of the SF Mortgage Loan, which results in a corresponding increase of the contract asset on our condensed consolidated balance sheets as we expect to be released from this obligation upon final resolution with the lender on the SF Mortgage Loan, in exchange for the transfer of ownership of the Hilton San Francisco Hotels.

As of March 31, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 774 million and $ 760 million, respectively.

As of June 30, 2024 and December 31, 2023, the contract asset on our condensed consolidated balance sheets was $ 789 million and $ 760 million, respectively.

The SF Mortgage Loan will remain a liability until final resolution with the lender is concluded and is included in debt associated with hotels in receivership on our condensed consolidated balance sheets.

3 unchanged sentences

The fair value of our debt and the hierarchy level we used to estimate fair values are shown below:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Level Carrying

4 unchanged sentences

Other mortgage loans 3 382 362 385 365

2024 Term Loan 3 200 198 — —

2025 Senior Notes 1 — — 650 652

1 unchanged sentence

2029 Senior Notes 1 750 703 750 702

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both March 31, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both March 31, 2024 and December 31, 2023.

2030 Senior Notes 1 550 556 — —

The fair value of the SF Mortgage Loan, which has a carrying value of $ 725 million as of both June 30, 2024 and December 31, 2023 and categorized as Level 3 of the fair value hierarchy, was $ 718 million as of both June 30, 2024 and December 31, 2023.

Refer to Note 6:

"Debt" for additional information.

During the three months ended March 31, 2024, we recognized an impairment loss related to one of our hotels due to our inability to recover the carrying value of the asset.

The estimated fair value of the asset that was measured on a nonrecurring basis was:

March 31, 2024

Fair Value Impairment Loss

During the three and six months ended June 30, 2024, we recognized impairment losses related to two of our hotels due to our inability to recover the carrying value of the assets.

During the three and six months ended June 30, 2023, we recognized an impairment loss related to one of our hotels and in October 2023, that hotel, along with the other hotel securing our SF Mortgage Loan, were placed into receivership.

Refer to Note 6:

"Debt" for additional information.

estimated fair value of the assets that were measured on a nonrecurring basis were:

June 30, 2024 June 30, 2023

Fair Value Impairment Loss Fair Value Impairment Loss

(in millions)

Property and equipment (1)

$ 2 $ 12 $ 234 $ 202

Total $ 2 $ 12 $ 234 $ 202

____________________________________________________________________________________

(1) Fair value as of March 31, 2024 was determined to be zero as the hotel is subject to a ground lease and is not expected to produce positive cash flows over the remaining lease term.

(1) We estimated fair value of the assets during the six months ended June 30, 2024, using a discounted cash flow analysis, with an estimated stabilized growth rate range of 2 % to 3 %, a discounted cash flow term of 10 years and a discount rate ranging from 17.0 % to 20.0 %.

We estimated fair value of the asset during the six months ended June 30, 2023, using a discounted cash flow analysis, with an estimated stabilized growth rate of 3 %, a discounted cash flow term of 10 years, terminal capitalization rate of 6.3 % and discount rate of 9.5 %.

The discount and terminal capitalization rates used for the fair values of the assets reflected the risk profile of the markets where the properties are located.

Fair value as of both June 30, 2024 and June 30, 2023 were measured using significant unobservable inputs (Level 3).

We are a REIT for U.S.

federal income tax purposes.

We have been organized and operated, and we expect to continue to be organized and operate in a manner to qualify as a REIT.

To qualify as a REIT, we must satisfy requirements related to, among other things, the real estate qualification of sources of our income, the real estate composition and values of our assets, the amounts we distribute to our stockholders annually and the diversity of ownership of our stock.

To the extent we continue to remain qualified as a REIT, we generally will not be subject to U.S.

federal (and state) income tax on taxable income generated by our REIT activities that we distribute annually to our stockholders.

Accordingly, no provision for U.S.

federal income taxes has been included in our accompanying condensed consolidated financial statements for the three or six months ended June 30, 2024 and 2023 related to our REIT activities.

Our taxable REIT subsidiaries (“TRSs”) are generally subject to U.S.

federal, state and local, and foreign income taxes (as applicable).

During the three and six months ended June 30, 2024, we recognized an income tax benefit of $ 12 million and $ 11 million, respectively, which is primarily associated with the effective exit from the Hilton San Francisco Hotels and the reversal of $ 14 million of tax expense that is no longer expected to be incurred.

During the three and six months ended June 30, 2023, we recognized income tax expense of $ 3 million and $ 5 million, respectively, which is primarily related to taxable income from our TRSs.

Share-Based Compensation

We issue equity-based awards to our employees pursuant to the 2017 Omnibus Incentive Plan (the “2017 Employee Plan”) and our non-employee directors pursuant to the 2017 Stock Plan for Non-Employee Directors (the “2017 Director Plan”), both of which are amended and restated from time to time.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of March 31, 2024, 6,423,353 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of March 31, 2024, 244,343 shares of common stock remain available for future issuance.

For both the three months ended March 31, 2024 and 2023, we recognized $ 4 million of share-based compensation expense.

As of March 31, 2024, unrecognized compensation expense was $ 33 million, which is expected to be recognized over a weighted-average period of 1.9 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the three months ended March 31, 2024 and 2023 was $ 12 million and $ 6 million, respectively.

The 2017 Employee Plan provides that a maximum of 14,070,000 shares of our common stock may be issued, and as of June 30, 2024, 6,434,577 shares of common stock remain available for future issuance.

The 2017 Director Plan provides that a maximum of 950,000 shares of our common stock may be issued, and as of June 30, 2024, 164,499 shares of common stock remain available for future issuance.

For both the three months ended June 30, 2024 and 2023, we recognized $ 5 million of share-based compensation expense and $ 9 million for both the six months ended June 30, 2024 and 2023.

As of June 30, 2024, unrecognized compensation expense was $ 29 million, which is expected to be recognized over a weighted-average period of 1.7 years.

The total fair value of shares vested (calculated as the number of shares multiplied by the vesting date share price) for the six months ended June 30, 2024 and 2023 was $ 13 million and $ 7 million, respectively.

Restricted Stock Awards

Restricted Stock Awards (“RSAs”) generally vest in annual installments between one and three years from each grant date.

The following table provides a summary of RSAs for the three months ended March 31, 2024:

The following table provides a summary of RSAs for the six months ended June 30, 2024:

Number of Shares Weighted-Average

3 unchanged sentences

Forfeited ( 48,864 ) 15.54

Unvested at March 31, 2024 1,058,933 $ 15.28

Unvested at June 30, 2024 1,010,315 $ 15.66

Performance Stock Units

3 unchanged sentences

One-eighth of PSUs will vest at each date a Share Price Target is achieved and any PSUs remaining after a four-year performance period will be forfeited.

As of March 31, 2024, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the three months ended March 31, 2024:

As of June 30, 2024, six of the eight Share Price Targets were achieved and thus 75 % of the awards granted were vested.

The following table provides a summary of PSUs for the six months ended June 30, 2024:

Number of Shares Weighted-Average

3 unchanged sentences

Forfeited ( 22,720 ) 16.04

Unvested at March 31, 2024 1,775,245 $ 17.69

Unvested at June 30, 2024 1,759,245 $ 17.72

The grant date fair values of the awards that are subject to the achievement of market conditions based on total shareholder return were determined using a Monte Carlo simulation valuation model with the following assumptions:

7 unchanged sentences

The following table presents the calculation of basic and diluted earnings per share (“EPS”):

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended June 30,

2024 2023 2024 2023

(in millions, except per share amounts)

Net income attributable to stockholders, net of earnings allocated to participating securities $ 28 $ 33

Net income (loss) attributable to stockholders, net of earnings allocated to participating securities $ 64 $ ( 150 ) $ 92 $ ( 117 )

Weighted average shares outstanding – basic 209 215 209 217

1 unchanged sentence

Weighted average shares outstanding – diluted 211 215 211 218

Earnings per share – Basic (1)

Earnings (loss) per share – Basic (1)

$ 0.31 $ ( 0.70 ) $ 0.44 $ ( 0.54 )

Earnings per share – Diluted (1)

Earnings (loss) per share – Diluted (1)

$ 0.30 $ ( 0.70 ) $ 0.44 $ ( 0.54 )

_____________________________________

(1) Per share amounts are calculated based on unrounded numbers.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three months ended March 31, 2024 and 2023 because their effect would have been anti-dilutive.

(1) Per share amounts are calculated based on unrounded numbers and are calculated independently for each period presented.

Certain of our outstanding equity awards were excluded from the above calculation of EPS for the three and six months ended June 30, 2024 and 2023 because their effect would have been anti-dilutive.

Business Segment Information

As of March 31, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels.

As of June 30, 2024, we have two operating segments, our consolidated hotels and unconsolidated hotels.

Our unconsolidated hotels operating segment does not meet the definition of a reportable segment, thus our consolidated hotels is our only reportable segment.

8 unchanged sentences

The following table presents revenues for our consolidated hotels reconciled to our consolidated amounts and net income to Hotel Adjusted EBITDA:

Three Months Ended March 31,

Three Months Ended June 30, Six Months Ended

2024 2023 2024 2023

(in millions)

2 unchanged sentences

Total revenues $ 686 $ 714 $ 1,325 $ 1,362

Net income $ 29 $ 33

Net income (loss) $ 67 $ ( 146 ) $ 96 $ ( 113 )

Other revenues ( 22 ) ( 22 ) ( 43 ) ( 42 )

9 unchanged sentences

Equity in earnings from investments in affiliates ( 1 ) ( 3 ) ( 1 ) ( 7 )

Income tax expense 1 2

Other gain, net — ( 1 )

Income tax (benefit) expense ( 12 ) 3 ( 11 ) 5

Other loss (gain), net 3 ( 3 ) 3 ( 4 )

Other items 6 7 9 13

1 unchanged sentence

The following table presents total assets for our consolidated hotels, reconciled to total assets:

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

(in millions)

3 unchanged sentences

Commitments and Contingencies

As of March 31, 2024, we had outstanding commitments under third-party contracts of approximately $ 91 million for capital expenditures at our properties.

As of June 30, 2024, we had outstanding commitments under third-party contracts of approximately $ 111 million for capital expenditures at our properties, of which $ 34 million relates to guestroom renovations at the Hilton Hawaiian Village Waikiki Beach Resort, $ 22 million relates to guestroom renovations at the Hilton Waikoloa Village and $ 11 million relates to guestroom renovations at the Hilton New Orleans Riverside.

Our contracts contain clauses that allow us to cancel all or some portion of the work.

4 unchanged sentences

In addition, losses related to certain contingent liabilities could be apportioned to us under the spin-off agreements.

In connection with our obligation to indemnify Hilton under the spin-off agreements, we have reserved approximately $ 8 million as of March 31, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

In connection with our obligation to indemnify Hilton under the spin-off

agreements, we have reserved approximately $ 8 million as of June 30, 2024 related to litigation with respect to an audit by the Australian Tax Office (“ATO”) of Hilton related to the sale of the Hilton Sydney in June 2015.

This amount could change as the litigation of the ATO’s claim progresses.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements